Report by the National Audit Office exposes misuse of public funds at a time when donors are looking for signs of progress in the fight against corruption

DAR ES SALAAM (Thomson Reuters Foundation) – Corruption and the theft of public funds remain widespread across most public institutions in Tanzania, despite a range of government initiatives put in place to fight graft, an independent audit showed.

Civil servants working for public organisations allegedly siphoned off millions of dollars of taxpayers’ money in the 2011/12 financial year and while there were some improvements, ministries, embassies and government agencies are still blighted by the misuse of public funds, said the country’s National Audit Office in its latest report.

“Most of the recommendations I made last year were not followed,” Controller and Auditor General Ludovic Utouh told reporters in the capital Dodoma. “This indicates a lack of seriousness on the part of the government.”

The report comes at a time when the Tanzanian government is struggling to bridge yawning gaps in its budget and when foreign donors are looking for evidence the country is committed to fighting corruption.

Chief auditor Utouh said the government faced an uphill task to put its books in order if it is to be given a clean bill of health by inspectors.

The wide-ranging report by the National Audit Office – an independent institution with constitutional powers to inspect the government's accounts without interference – said officials were suspected of stealing more than $3.12 million in revenues in the past year, including visa fees from a number of Tanzania’s diplomatic missions around the world.

The audit refers to financial irregularities allegedly carried out by Tanzanian diplomats, particularly in Brussels, London, Stockholm, Geneva and Tokyo, who reportedly flouted procedures and broke public service regulations with the aim of misusing public funds.

The report also said 950.3 million Tanzanian shillings ($593,937) had not been accounted for by Tanzania’s embassy in Tokyo and no explanation had been given about the missing funds.

AUDIT RECOMMENDS PROSECUTIONS

President Jakaya Kikwete sacked six of his cabinet ministers last year after the audit office implicated them in corruption scandals. The ministers were in charge of portfolios including finance, energy, tourism, trade, transport and health.

This year, the audit recommended that three former senior officials from Air Tanzania, the national airline, be prosecuted over a controversial aircraft-leasing contract that saddled the country with $41 million in debt. However, there was no indication the anti-corruption watchdog would file criminal charges against them.

The officials are David Mattaka, former director general of Air Tanzania, William Haji, former auditor, and Elisaph Ikomba who was chief accountant at the time.

It also recommended that the former boss of Tanzania’s state-run power company TANESCO William Mhando be prosecuted. Mhando was sacked last year for flouting procedures and awarding a contract worth $554,500 to a company he jointly owned with his wife and children.

“The government has failed to take concrete action against offenders despite the incriminating evidence brought forward by this report,” said Evarist Kagaruki, a local political commentator. “People want to see criminals prosecuted.”

The audit uncovered a false payment on fictitious goods – more than 30 billion Tanzanian shillings ($19.3 million) were spent by government organisations to procure goods and services that were never delivered.

Tanzania spends nearly 60 percent of its budget on procurement and the procurement sector is particularly susceptible to corruption because it involves large amounts of money, analysts said.

The report also showed that the energy ministry failed to collect over $12.6 million in revenues from foreign firms who are obliged to pay 4 percent royalties on extracted minerals such as gold.

Development partners supporting Tanzania have repeatedly raised eyebrows at the country’s slow pace of reforms, especially in fighting corruption in areas critical to economic growth.

In 2010, a group of donors slashed funding pledges for Tanzania’s 2010/11 budget by $220 million saying they were dissatisfied with the country’s progress in fighting corruption.

The report showed that the amount of national debt had been lowered by $383 million from 22 trillion Tanzanian shillings ($13.6 billion) in June last year. But the government could not explain to the auditor why this had occurred.

The Tanzanian government has been borrowing money over the years using Bank of Tanzania treasury bonds to bridge gaps in its national budget.

Reacting to the report, shadow finance minister Zitto Kabwe said this “scandalous” gap in the national debt left many questions unanswered.

“This failure to get a satisfactory explanation for the disappearance of a huge amount of money from the national debt needs to be viewed with a great deal of suspicion, it needs to be investigated and we need proper answers,” he said.

Kabwe told reporters that several research reports had revealed a strong link between the national debt and capital flight into offshore accounts. He cited a study by Leonce Ndikumana and James Boyce entitled Odious Debts: How foreign loans and capital flight bled a continent that suggested Tanzania’s national debt was being used to siphon off cash and hide it offshore.

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of the Thomson Reuters Foundation. For more information see our Acceptable Use Policy.